Renewable, DSM Options

Montana's largest utility is examining renewable energy and demand-side options to serve its default supply customers who have chosen to remain on its system with the state's electric industry restructuring.

NorthWestern Energy announced in mid-November renewed plans to solicit wind power proposals for its default supply portfolio; a request for proposals is planned for early December. A previous wind RFP resulted in a cancelled power-purchase contract after state regulators questioned the utility's selection of Montana Wind Harness for 150 megawatts of capacity (see Con.WEB, Aug. 29, 2002).

The investor-owned utility, formerly known as Montana Power, also is analyzing wind and energy conservation for its default customer resource mix.

NorthWestern already has commitments for about 85 percent of its peak load requirements for default supply customers, spokeswoman Claudia Rapkoch told Con.WEB. Wind and/or demand-side resources "would fill some portion" of the remainder, depending on the outcome of the wind solicitation and the wind and conservation assessments, she said.

These initiatives are separate from NorthWestern's Universal Systems Benefits public purposes funding for conservation and renewables programs.

A Montana energy activist and NorthWestern advisory group member praised the utility for seeking wind resources and studying demand-side prospects. "They're looking at things very holistically in terms of trying to figure out the right numbers for both the distribution utility [and] the default supply," said energy policy director Patrick Judge of Montana Environmental Information Center.

Meanwhile, one of the wind developers spurned in NorthWestern's initial RFP has invoked a federal law to try to force NorthWestern to buy output from its planned 50-MW project (see Con.WEB, Oct. 29, 2002). This case was pending before the Montana Public Service Commission as of Nov. 25.

Wind Solicitation/Study
NorthWestern expects to issue its new request for wind proposals in early December, with bids due by mid-January, according to Rapkoch.

A concurrent study of wind as a potential default supply resource also is under way. Cost and system integration of intermittent wind are among the primary issues, Rapkoch said. She called the solicitation and study "a dual effort," with each informing the other.

"We intend to complete the wind assessment process by spring, in time to support project development, construction and implementation in 2003," Dennis Lopach, NorthWestern senior vice president of administrative services, said in a news release.

This is the utility's second formal pursuit of wind power for its default supply, which Rapkoch said averages about 670 aMW for base load. In the first go-round, NorthWestern sought 150 MW of wind capacity and tabbed Montana Wind Harness for the entire amount (see Con.WEB, Dec. 20, 2001). But other bidders criticized the choice on grounds of cost and MWH's qualifications. The PSC ultimately decided the utility had not adequately explained MWH's selection, and thus it could not conclude the choice was reasonable. NorthWestern shortly thereafter cancelled its power-purchase agreement.

This checkered history is "definitely a consideration" for NorthWestern's new wind solicitation, said MEIC's Judge, one of the outside advisors for NorthWestern.

"One recommendation we made was that they follow through with their RFP to give the [wind] industry confidence that this process will lead to a signed contract," he said. "Many of the problems that plagued the previous process are being addressed in a couple of different ways," he added, citing an advisory committee as well as default supply portfolio guidelines under development by the PSC.

"We're hoping that we will have a much cleaner process and a much more defensible process and it will lead to an operable wind facility by the end of 2003," a tight but feasible schedule, he said. That deadline matches the scheduled expiration of the vital federal wind energy production tax credit.

Judge hopes NorthWestern will pursue "at least" 150 MW as it did with the last RFP.

Montana has been dubbed the "Saudi Arabia of wind," Judge said, yet it has no large-scale operating wind projects.

"It's just a matter of making them work financially, politically and in the end physically in terms of being able to move [the generated energy] somewhere," said Mark Lindberg, energy and agriculture officer for the Montana Governor's Office of Economic Opportunity. "We don't have a market entirely yet in Montana [for renewables], and I think it will come. We've got to be able to trade with somebody somewhere." The biggest hurdle remains limited transmission capacity to deliver wind power to markets elsewhere in the Rocky Mountains and across the Cascades, he said--a situation unlikely to change soon amid uncertainties over future transmission system operations.

Despite the state's long history with and abundant supplies of fossil fuels, Montanans are coming to realize the importance of renewables, he said. Tax revenues, income for agriculturists, economic development, electric customer choices and environmental considerations are among the selling points for wind. "In terms of wind specifically, we want to do it. We realize the values of it ... We just need to get those pieces to fit so we can carry it out," Lindberg told Con.WEB.

DSM Opportunities
NorthWestern meanwhile is conducting what Rapkoch called "a very systematic and thorough analysis" of demand-side opportunities, including how they might interact with supply-side default customer resources.

A collaborative group is exploring the "appropriate" magnitude and timing for efficiency, conservation and load management initiatives, according to the utility's news release. "This assessment of conservation resources will help NorthWestern Energy better use conservation as part of an overall strategy to manage electricity demand in Montana," said Mark Thompson, energy supply executive director. "Education and consumer awareness will also be a key component of a comprehensive conservation plan to reduce supply cost during peak periods."

DSM recommendations should be available by early 2003, Rapkoch said. Any implementation plans likely would follow later in the year.

Lopach said NorthWestern expects to "coordinate and share" information with the Northwest Power Planning Council, which is assessing regional energy-saving potential for its upcoming power/conservation plan.